USBOND
Yen carry trade participants are long US Treasuries funded by cheap yen borrowing. If Japan's rates rise and the yen strengthens, forced liquidations hit long bonds first — the same dynamic that caused the Aug 2024 vol spike, now with a more fragile US fiscal backdrop.
PTJ's insight is that easing-cycle inflows have pulled $500B+ of institutional demand forward into bonds, creating a temporary artificial floor. Once the easing cycle ends, that bid reverses and deficits have no natural buyer — the reckoning is deferred, not cancelled.
Long-run deflation from AI, aging, and debt makes long-duration Treasuries the right asset to hold
Bob Elliott argues central banks historically never ease into oil shocks — they tighten or hold. Markets pricing 1-2 Fed cuts are wrong; short long-duration Treasuries captures the repricing when the Fed is forced to stay hawkish.
Dalio describes a long-bond supply glut ($9T rollover plus $2T new issuance) hitting fewer foreign buyers who are rotating into gold, the classic late-cycle setup where long yields rise and long-bond prices fall. Shorting the long end of the curve is the direct expression.
Nobody knows if AI cash flows survive, so 5% risk-free govt bonds beat paying up for equity risk.
AI replaces white-collar labor en masse, a deflationary force across the economy
Debt death spiral plus a balance-sheet-tightening Fed pushes long yields higher, TLT lower
US government bonds stop looking safe and start looking risky as deflation and money-printing erode confidence in Treasuries.
Fiscal contraction plus disinflation is the bull case for long Treasuries the Treasury chief is building
Inflation rolling over + $600B smaller deficit point to falling rates into 2026